Many companies, due to the specifics of their activities, use an agency agreement when working with each client (used by entrepreneurs and legal entities, often real estate agencies). An agency contract or an agency contract is also useful for other organizations: when there are not enough employees to fulfill the entire volume of orders, they hire a specialist from the outside.
Of course, an agency contract as a type of contract has its own characteristics and its content must meet the standards described in the law for all types of contracts (article 432 in the civil code) and for certain types (federal laws). Despite the fact that there are no specific requirements for an agency contract in the law, the following significant features can be distinguished (Articles 1005-1011 in the Civil Code).
In an agency agreement, a person carrying out certain activities for a fee is listed as an agent. He may act on behalf of the company (principal) with which he entered into an agreement in matters of his competence. If we are talking about a client and a real estate agency, for example, the agent is a realtor, i.e. representative of the principal (agency).
The main distinguishing feature of the contract is the agency fee. If it is not registered, the contract can be considered invalid (difficult, but possible). Since the fee for the agent’s work is an essential condition of the contract, it should be registered and testify to the agreement reached between the parties in important issues of contractual relations (isn’t the issue of paying for the work performed essential ?!)
As in any other contract, the subject of the contract (the activity whose fulfillment is expected from the agent), the validity period, must be prescribed in the agent. These clauses of the agency contract are also considered essential conditions of the contractual relationship. Sections should be added to it on the responsibility of the parties and their rights. For example, what consequences will occur if one of the parties refuses to fulfill its obligations under the contract.
The agency agreement also differs from other types in that the agent draws up an acceptance certificate or report to confirm the work performed. Only after the principal has signed this act (after the adoption of the report) are the works considered completed and payable in the amount of an agency fee. Organizations (and these are, as a rule, service agencies) that carry out their activities for the population through agency agreements do not draw up such acts.
Organizations that work with clients exclusively through them must sign and contract to keep and record them in accounting (to confirm expenses or income). Accounting agency contracts is as follows.
The first one. The tax code clearly states that VAT is levied on agency contracts (i.e., agent fees).
The second one. If the company takes an agent from the outside, payment for its services is made as with a “debtor or creditor”. The basis for settlement with the agent is his report on the work performed or the act of acceptance of work (signed by the agent and, if approved by the principal, the company hiring him).
If the company works with clients on the basis of agency agreements, the agency fee is considered the income of the enterprise. At the same time, income taxes can be reduced due to expenses (but they must be confirmed by official documents) if this amount is posted as paid by the customer solely on the expenses of the company. Taxes are not levied on the amount of expenses.
Thus, an agency agreement is a convenient form of cooperation, and from the point of view of accounting, which also makes it possible to introduce conditions important for the parties to it.